# u.s.Departmentof 

### Transportation
Officeof

## theSecretary ofTransportation



# October 26,2010

Ms, Margi Holmstrom Vice President-Administration Carlsbad-PalomarAirlines, Inc,

d/b/a California Pacific Airlines 5670 EI Camino Real, Suite D Carlsbad, CA92008

DearMs, Holmstrom: 1200 NewJersey Avenue, SE Washington, DC 20590



# Re: Dockets DOT-OST-201O-0126 and DOT-OST2010-0125, Ruling on Motion of Carlsbad-Palomar Airlines, Inc, d/b/a California Pacific Airlines for Confidential Treatment ofDocuments

We are cUlTently reviewing the certificate applications of Carlsbad-Palomar Airlines, Inc, d/b/a California Pacific Airlines ("CP Air") in Dockets DOT-OST-201O-0126 and DOTOST-201O-0125, The purpose ofthis letter is to notify you ofour intended ruling on your request for confidential treatment of documents filed in support of the referenced application, And to request additional information needed to fully prosecute CP Air's applications,

CP Air's motion, filed August 26, 2010, requests that the following material be considered for confidential treatment under 14 CFR 302,12 (Rule 12):

Exhibit 3

- Complied Balance Sheets Exhibit4

- Forecast Balance Sheets Exhibit 6

- Revised hlcome StatementForecast Exhibit 7

- Gross and NetProceeds ofOffering and Private Placement Memorandum Exhibit 8

- Third-party verification ofCash Deposits

In SUppOlt ofyour request for confidential treatment ofthe noted documents, you stated that these documents include sensitive commercial and/or fmancial information the public disclosure ofwhich could adversely affect CPAir's commercial and financial interest

Rule 12 instructs us to evaluate requests for confidential treatment in accordance with the standards of disclosure found in the Freedom of Infoffilation Act (5 U,S,c' section 552), 

# By this standard, information 

# may be withheld from disclosure under 5 lLS,c' 552(b)(4) if if is (

## J)commercial or financiaL (1) obtained froln a person outside rhe 

# govenlinent, and (.1 I

### " ( 

## StOles, 

# 615 F2d



# The information identified above clearly meets the first two requirements. The remaining question is whether the information is privileged or confidential, that is, whether "disclosure ofthe information is likely to have either ofthe following effects: (1) impair the Govemment's ability to obtain necessary information; or (2) cause substantial harm to the competitive position of the person from whom the information was obtained." [National Parks and Consenlatiol1 Association v. Morton, 

# 498 F.2d 765, 770 (D.C. Cir. 1974)] Furthermore, to be privileged or confidential, the information must not be ofthe type that is usually released to the public. [Gulfand Western Industries, Inc. v. United States, 

# 615 F.2d 527, 530)]

Absent extenuating circumstances, it is not the Department's practice to withhold from public disclosure information regarding an applicant's current and/or historical financial statements, pre-operating and first-year expense forecasts, proposed operating plans and related statistics, or third-party verification of funds and/or an applicant's funding plans. The Department will generally grant confidential treatment to information pertaining to a company's forecast revenues. Therefore, we will grant confidential treatment to the

revenue and income line items, and the average ticket price and flight times contained in Exhibit 6 of CP Air's first-year operating expense forecast and supporting statistics. In 

# addition, we will grant confidential treatment to the Private Placement Memorandum in Exhibit 7. We have previously granted CP Air confidential treatment of this material and

we see no reason not to continue to grant CP Air's request to withhold this material from public disclosure. The remaining material requested confidential treatment in Exhibit 6, and Exhibits 3, 4, and 8 are denied confidential treatment. In 

# doing so, we find that the applicant has not shown that substantial harm to its competitive position would result from public disclosure of the given information and such information is not the type that is normally released to the public. However, CP Air may censor any personal addresses or any account numbers contained in the information denied confidential treatment or in any future supplemental filings that containing personal addresses or account numbers.

Under Rule 12, the Department's ruling on a motion for confidential treatment will not take effect if, within five (5) business days after issuance, the person requesting confidential
treatment files a petition for reconsideration ofthat decision, or files a statement that he or she in good faith intends to seekjudicial review ofthe decision. If

# CP Air elects to petition the Department as to this confidentiality determination, we expect that it will provide a statement explaining how the items fall within the exceptions under the Freedom of Information Act and is not otherwise required to be filed publicly by all applicants for certificates of public convenience and necessity. Responses shall be due within five calendar days ofthe filing ofsuch a petition.

If

# CP Air elects not to file a petition, we direct that it file the information noted above in the public docket in this proceeding within five business days of the date of this letter. In 

# the meantime, as is the Depatiment's practice, further processing of your application will be deferred pending receipt ofthis material.

### A~; 

## a separate mMko-r, 

## fI:.'vic\ved the :mppJemcnLd 

## ;jjfonrwtion provided by

on September 22, and October]2, 20

## J0_ In those filings CP i\ir 

## indentified Messrs. Chuck Hansen, Femando Iriarte Woodside, and John G. Ross as new key personnel of the company_ However, the compliance information required by section 204.30), (m), (0), 

## (p), and (q) ofour rules (copy attached) was not provided for these individuals. In addition the citizenship of Mr. Ross was not identified. Therefore, in order to complete the processing of your application, we ask that you please provide the compliance information for Messrs. Hansen, Woodside, and Ross, and identify the citizenship ofMr. Ross within 14 days ofthe date ofthis letter.

Thank you for your cooperation in this matter. 

# If you have any questions, please feel free
to contact DamonWalker at (202) 366-7785 orbye-mail at Damon.Walker@dot.gov.

Sincerely,

DamonD. Walker Transportation Industry Analyst AirCarrierFitness Division

cc: Docket DOT-OST-2010-0126

# PART**104~-DATA** 

# TO SUPPORT FITNESS DETERl\lINATIONS

Subpart A--General Provisions

Sec. 204.I Purpose. 204.2 Definitions.

SubpartB--FilingRequirements

204.3 Applicants for new certificateorcommuter air carrier authority. 204.4 Carriers proposing to provide essential air service. 204.5 Certificated and conunuter aircarriers undergoing orproposing to undergo substantial change in operations, ownership, ormanagement. 204.6 Certificated and commuter air carriers proposing a change in operations, ownership, or management which is not substantial. 204.7 Revocation for dormancy.

SUBPART A--GENERAL PROVISIONS

Sec, 204.1 Purpose. This part sets forth the fitness data that must be 

### submitted by applicants for certificate authority, by applicants for authority to provide service as a commuter air carrier to an eligible place, by caniers proposing to provide essential air transportation, and by certificated air carriers and commuter air carriers proposing a substantial change in operations, ownership, or management. This part also contains the procedures and filing requirements applicable to carriers that hold dormant authOlity.

Sec. 204.2 Definitions. As 

### used in this part: (a)All-cargoaircanierorsection 41103 carrier

### means an air carrier holding an all-cargo air

### transportation certificate issued under section 41103 ofthe Statute authorizing the transportationby aircraft in interstate airtransportation ofonlyproperty oronly mail, orboth. (b) Certificate authority 

### means authority to provide air transportation granted by the Department of Transportation or Civil Aeronautics Board in the form of a certificate of public convenience and necessity under section 41102 of the Statute or an all-cargo air transportation certificate to perform all-cargo air

### transportation under section 41103 ofthe Statute. Certificated carriers are those thathold certificate authority. (c) Citizen of the UnitedStates 

### means: (I)

### An individual who is a citizen ofthe United States; (2) A partnership each ofwhose partners is an individual who is a citizen ofthe United States; or (3) A corporation or association organized under the laws of the United States or a State, the District of Columbia, or a territory or possession ofthe United States, ofwhich the president and at least two-thirds ofthe board ofdirectors and other managing officers are citizens of the United States, and in which at least 75 percent ofthe voting interest is owned orcontrolled by persons that are citizens ofthe United States. (d) Commuterair carrier

### means an air

### carrierholding or seeking authority under part 298 ofthis Chapterthat carries passengers on at least five round trips per weekon at least oneroutebetween two or more points according to its published flight schedules that specify the times, days ofthe week. and places between which those flights are performed. (e) Eligibleplace 

### means a place in the United States that: (I)Was an eligible point under section 419 ofthe Federal Aviation Act of 1958 as in effect before October I, 1988; (2) Received scheduled air

### transportation at any timebetweenJanuary I, 1990, and November4, 1990; and (3) Is not listed in Department ofTransportation Orders 89-9-37 and 89-12-52 as a place ineligible for compensation under Subchapter II ofChapter417 ofthe Statute. (f) Essential air service 

### is that air transportation which the Department has found to be 

### essential under Subchapter II ofChapter 417 ofthe Statute. (g) 

### Fit means fit, willing, and able to perform the air transportation in question properly and to conform to the provisions ofthe Statute and therules, regulations and requirements issued underthe Statute. (h) Interstate air transportation 

### means the transportation ofpassengers orproperty by aircraft as a common carrier for compensation, or the transportation ofmail by aircraft-- (I) 

### Between a place in--

(i) A State, territory, orpossession ofthe United States and a place in the District ofColumbia oranother State, territory, or possession ofthe United States; (ii) Hawaii and anotherplace in Hawaii through the airspace over a place outside Hawaii; (iii)TheDistrict ofColumbia and anotherplace in the District ofColumbia; or (iv) Aterritory orpossession ofthe United States and another place in the same territory orpossession; and (2)When any part ofthetransportation is by aircraft. (i) 

### Key personnel 

### include the directors, president, chief executive officer, chief operating officer, all vice presidents, the directors or supervisors of operations, maintenance, and fmance, and the chief pilot of the applicant or air carrier, as well as any part-time or full-time advisors or consultants to the management ofthe applicant oraircarrier. 0) NomUllized operations 

### are those which are relatively free of start-up costs and temporary barriers to full-scale operations posed by the callier's limited experience. (k) Relevant corporations 

### are the applicant or air 

### carrier, any subsidiary thereof, any predecessor thereof(i.e., any air carrier in which any directors, principal officers or persons having a substantial interest have or once had a substantial interest). and any company (including a sole proprietorship orpartnership) which has a significant financial or managelial influence onthe applicant or aircarrier. The latter includes: (I) Any company (including a sole proprietorship or partnershifl) holding more than 50 percent ofthe outstanding voting stock ofthe applicant or air cal1'ier: and

### 12) Any compiHl)' (including a sole proprietorship or parinership) holding between 

### 20 percent and 

### 50 percent ofthe outstanding voting**s\o.~L** 

# or the ilpplicanl or air cartier and which has signiJlcant influence over the applicant or air carrier as indicated, for example, by 25 percent representation on the board of directors, pal1icipation in policy-making processes, substantial inter-company transactions, or managerial persOimel with common responsibilities in both companies. (I) Substantial change ill operations. ownership. ormonagemelltincludes, but is not limited to, the following events: 

### (I) Changes in operations from charter to scheduled service, cargo to passenger service, shoJ1-haul to long-haul service, or (for a ceJ1ificated aircanier) small-aircraft to large-aircraft operations; (2) The filing ofa petition for reorganization or a plan ofreorganization under Chapter 

### II ofthe federal bankruptcy laws; (3) The acquisition by a new shareholder or the accumulation by an existing shareholder ofbeneficial control of 10 percent or more of the outstanding voting stock in the corporation; and (4) A change in the president, chief executive officer or chief operating officer, and/or a change in at least half of the other key personnel within any l2-monthperiod orsince its latest fitness review, whichever is the more recent period. (m) Substantial interestmeans beneficial control of 10 percent ormore ofthe outstanding voting stock.



### SUBPART B--FILING

### REQUIREMENTS



### Sec. 204.3 Applicants

### for new certificate orcommuter aircarrierauthority. An applicant for a type ofceJ1ificate authority it does not currently hold or for commuter air canier authority shall file the data set forth in paragraphs (a) through (v) of this section, 

### In addition, the Department may require an applicant to provide additional data if**nec~sary** to reach an informedjudgment about its fitness. Ifthe applicant has previously formally filed any ofthe required data with the Department or with another Federal agency and they are available to the Department, and those data continue to reflect the current state ofthe canier's fitness, the applicant may instead identify the data and provide a citation for the date(s) and place(s) of filing. Prior to filing any data, the applicant may contact the Air Canier Fitness Division to asCeJ1ain what data required by this section are already available to the Department and need
notbeincluded in the filing.

Note: Ifthe applicant intends to use as evidence data it has previously filed pursuant to part 241 reporting requirements and those data contain
errors, the applicant must first file correctedreports in accordance with Sec. 241.22(g).

(a) Thename, address, and telephonenumber ofthe applicant. (b) Theform ofthe applicant's organization. (c) The Statelaw(s) underwhich the applicant is organized. (d) Ifthe applicant is a corporation, a statement provided by the Office of the Secretary of State, or other agent ofthe State in which the applicant is incorporated, certifying thatthe applicant corporation is in good standing. (e) A sworn affidavit stating that the applicant is a citizen ofthe United States. (f)The identity ofthe key personnel who would beemployedbythe applicant, including: (I)Theirnames and addresses; (2) The experience, expeJ1ise, andresponsibilities ofeach; (3) Thenumber ofshares ofthe applicant's voting stock held by each and the percentage ofthe total number of such shares issued and outstanding, andthe citizenship andprincipal business ofanyperson for whose account, ifother than theholder, such interest is held; (4) Thecitizenship ofeach; and (5) A description ofthe officerships, directorships, shares of stock (if 10 percent or more oftotal voting stock outstanding), and other interests eachholds orhasheld in any air canier, foreign aircanier, common canier, person substantially engaged in the business ofaeronautics

or persons whose principal business (in purpose or fact) is the holding of stock in or control of any air canier, common canier or person substantially engaged inthe business ofaeronautics. (g) A list ofall persons having a substantialinterest in the applicant. Suchlist shall include: (l)Eachperson's name,address and citizenship; (2) Thenumber ofshares ofthe applicant's voting stock held byeach suchperson andthe corresponding percentage ofthe total number of such shares issued and outstanding, and the citizenship and principal business ofany person for whose account, ifother than the holder, such interest is held; (3) If any two ormore persons holding a substantial interest inthe applicant are related by blood ormaniage, suchrelationship(s) shall be included inthe list; and (4) Ifanypersonorsubsidiaryofa person having a substantial interest in the applicant is orhas everbeen (i)

### An aircanier, a foreign aircanier, a common canier, or (ii) Substantially engaged inthebusiness ofaeronautics, or (iii)

### An officer or directorofany suchentity, 61" (iv) A holder of 10 percent or more of total outstanding voting stock of any such entity, the list shall describe such relationship(s). (h) A list of the applicant's subsidiaries, if any, including a description of each subsidiary's principal business and relationship to the applicant. (i) A list of the applicant's shares of stock in, or control of, any air canier, foreign air canier, common canier, or person substantially engaged inthebusiness ofaeronautics.

.. 

### (j) To the extent any relevant corporation has been engaged in any business prior to the filing of the application, each applicant shall provide: (I) Copies of the 10K Annual Reports filed in the past 3 years by any relevant corporation required to file such reports with the Securities andExchangeCommission, and (2) Copies ofrecentiy filed IOQ Quarterly Reports, as necessary, in order to show the financial condition and results ofoperations of theenterprisecurrentto within 3 months ofthe dateofthefiling ofthe application, (k) 

### If 10K Reports are not filed with the Securities and Exchange Cm,nmission, the following, for the 3 most recent calendar or fiscal years, reflecting the fmaneial condition andresults ofoperations ofthe enterprisecurrent to within 3 months ofthe dateofthe filing ofthe application: (1) TheBalance Sheet ofeachrelevant corporation;(2) The In("oHlc' StatcTlll'JIt nf Cl(h J**~'l.,:',** ;lJ!t cl>ll:'(X;11 ion: (:;) /-\11 foutnot('s apu1ic,-1l;/, tCI tIj('**flt1~lll':'i;d** '.L'Jf'rn":!lL" indwJing: (i) A statel11ent as to whether the dUcLlments were prepared in '-Iccordance \\'ilh**Gcn(r~dly .-\I:n~ptt'J**  Accounting Ptinciples, and (ii) A description of the significant accounting policies of each relevant corporation, sud! as for depreciation, amortization of intangibles, overhauls, uneamed revenues, and cost capitalization; (4) A statement ofsignificant events occuning subsequent to the most recent Balance Sheet dale for eachrelevant corporation; and (5) A statement identifying the person who has prepared the financial statements, his or her accounting qualifications, and any affiliation he orshe has with the applicant (l) A list ofall actions and outstandingjudgments for more than $5,000 against any relevant corporation, key personnel employed (or to be employed) by any relevant corporation, or person having a substantial interest in any relevant corporation, including the amount of each judgment, the palty to whom it is payable, and how long it has been outstanding, (m) The number ofactions and outstandingjudgments of less than $5,000 against each relevant corporation, key personnel employed (or to be employed) by any relevant corporation, orperson having a substantial interest in any relevant corporation, and the total amount owed by each

on suchjudgments. (n) A description ofthe applicant's fleet ofaircraft, including: (l) The number ofeach type ofaircraft owned, leased and to bepm-chased or leased; (2) Applicant's plans, including financing plans, for the purchase or lease ofadditional aircraft; and (3) A sworn affidavit stating that each aircraft owned or leased has been certified by the FAA and currently complies with all FAA safety standards, (0) A description of the current status of all pending investigations, enforcement actions, and formal complaints filed by the Department, including the FAA, involving the applicant or any relevant corporation, any personnel employed (or to be employed) by any relevant corporation

or person having a substantial interest in any relevant corporation, regarding compliance with the Statute or orders, rules, regulations, or requirements issued pursuant to the Statute, and any corrective actions taken, (Ifan applicant has a compliancehistory that warrants it, additional information may berequired.) (p) A description ofall charges ofunfairordeceptive or anticompetitive business practices, oroffraud, felony orantitrust violation, brought against any relevant corporation or person having a substantial interest in any relevant corporation, ormember ofthe key personnel employed (or
to be employed) by any relevant corporation in the past 10 years, Such descriptions shall include the disposition or current status ofeach such proceeding, (q) A description ofany aircraft accidents or incidents (as defmed in the National Transportation Safety Board Regulations, 49 CFR 8302) experienced by the applicant, its personnel, or any relevant corporation, which occurred eitherduring the yearpreceding the date ofapplication or at any time inthe past and which remain under investigation bythe FAA, the NTSB, orby the companyitself, including: (I)Thedate ofthe occurrence; (2) The type offlight; (3) The number ofpassengers andcrew onboard and an enumeration ofany injuries orfatalities; (4) A description ofany damage to the aircraft; (5) The FAA and NTSB file numbers and the status ofthe investigations, including any enforcement actions initiated against the carrier

orany ofits personnel; and (6) Positive actions taken to prevent recurrence, (If an applicant's history of accidents or incidents warrants it, additional information
may berequired.) (r) A briefnarrative history ofthe applicant (s) A descliption of all Federal, State and foreign authority under which the applicant has conducted or is conducting transportation operations, and the identity of the local FAA office and personnel responsible for processing an application for any additional FAA authority needed to conduct theproposed operations, (t) A description ofthe service tobeoperated ifthe application is granted, including: (I) A forecast Balance Sheet for the first normal year ending after the initially proposed operations have been incorporated, along with the assumptions underlying the accounts and amounts shown; and (2) A forecast Income Statement, broken down by quarters, for the first year ending after the initially proposed operations are normalized, and an itemization of all pre-operating and start-up costs associated with the initiation of the proposed service, Such Income Statement shall include estimatedrevenue blockhours (or airborne hours, for charter operators) and revenue miles by type ofaircraft, number of passengers and number oftons ofmail and cargo to becarried, transportrevenues and an estimate ofthe traffic which wonld be generated in each market receiving the proposed service, Such statements shall also include a statement as to whether the statements were prepared on the accrual

orcash basis, an explanation ofhow the estimated costs and revenues were developed, a description ofthe manner in which costs and revenues

are allocated, how the underlying traffic forecasts were made, and what load factor has been assumed for the average and peak month, Preoperating and start-up costs should include, but are not limited to, the following: Obtaining necessary government approval; establishing stations; introductory advertising; aircraft, equipment and space facilitydeposits andrent; training; and salaries earned prior to start-up, (u) A signed counterpart ofAgreement 18900 (OSTForm4523) as required bypart 203 ofthis chapteL (v) The following certification, which shall accompany the application and all subsequent written submissions filed by the applicant in, connection with its application: Pursuant to title 18 United States Code section 100

## r, I [the individual signing the application, who shall be a principal owner, seniorofficer,

or internal counsel of the applicant], in my individual capacity and as the authorized representative of the applicant, have not in any manner knowingly and willfully falsified, concealed or covered up any material fact or made any false, fictitious, or fraudulent statement or knowingly used any documents which contain such statements in connection with the preparation, filing orprosecution ofthe application, I understand that

an individual who is fonnd to have violated the provisions of 18 U,S,C section 1001 shall be fined nor more than $10,000 or imprisoned not

more than five years, orboth,